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Social security is based on what you paid in, so the earlier you start withdrawing the lower your monthly check is. You couldn’t allow people to receive the ful

Social security is based on what you paid in, so the earlier you start withdrawing the lower your monthly check is. You couldn’t allow people to receive the full amount starting at 60 without bankrupting the program.

dsr_ 7y ago
Ahem. Social security is not self-funded, it's funded by current payroll tax receipts, plus a 2.6 trillion trust fund, plus about 5 trillion in debt owed to it by the rest of the government.
- surge 7y ago
  Right, SS is already in a risky position, most millenials question if it'll even be standing when it comes to their turn (especially if population drops since they're having less children who will pay in), what they're suggesting would make it worse.
  - rlt 7y ago
    Well... it's a morbid thought, but if COVID-19 kills a large number of old people quickly, maybe SS will work itself out (FWIW it was my elderly dad who pointed this out to me) Related: according to Twitter, kids are starting to call COVID-19 the "boomer remover" https://twitter.com/BaileyCarlin/status/1238147875143647234 https://twitter.com/BaileyCarlin/status/1238147875143647234
  - thawaway1837 7y ago
    Yeah, except that’s not true at all. SS is not in a risky position. The worst that can happen to it is current SS receipts do not pay out enough money for the current SS recipients to live a reasonable quality of life. SS is a transfer of funds from current earners to current retirees. People trying to scare people about SS talk about the trust fund depleting, but the trust fund is simply a bonus that was created to account for the fact that when the baby boomers started retiring, their numbers would be much greater than the numbers of working people to maintain a healthy SS system. So they set aside some additional money so the large number of baby boomers, who in their prime had to pay for a relatively smaller number of retirees, were paying some money towards their own retirement and so wouldn’t place too much of a burden when they retired.
    - toomuchtodo 7y ago
      Thanks for injecting some sanity into this. Benefits drop to about 75% when the trust fund is exhausted around 2026, and we'd simply need to take the salary cap off Social Security taxes and possible transfer some monies from the general fund. It's an entirely solvable political problem.
    - jfengel 7y ago
      "Set aside" is a funny way to put it. They "set it aside" in US Treasury bonds, causing a massive growth in the US government -- who still managed to run a deficit on top of that because they also cut taxes. That artificially boosted the GDP in a way that made a few people much richer while leaving everybody else flat at best. Now, their children inherit an oversized government that they must either cut or pay for with a big tax hike. The people who pocketed that money have resisted any attempt to put the tax burden on them, and indeed, have demanded more and more tax cuts. The next generation is thus not only paying for their parents' retirements, as per the Social Security social contract, but also financing their parents' massive debt. The Social Security Trust Fund helped enable that by making a massive government debt seem smaller than it would otherwise have been.
- themagician 7y ago
  It was my understanding that the $2.6 ($2.89 actually) trillion is the total asset balance. That includes everything “owed.”
- larrywright 7y ago
  I never said it was self-funded, just that what you take out is a function of how much you pay in + when you begin withdrawing. The proposal here is a major shift in how it works.
ajross 7y ago
You say that as if liquidity management in a crisis wasn't a thing. Why, exactly, should free temporary cash be available to investment banks but not entitlement programs?
- surge 7y ago
  As mentioned in another comment, its a loan, not free cash. Investment banks will have to pay it back afterwards.
  - macawfish 7y ago
    Sure, but it's basically free money for them because they'll turn around and loan it to the rest of us with higher interest rates.
    - JumpCrisscross 7y ago
      > it’s basically free money They can only borrow to the extent they have collateral. You can do the same thing. Any decent broker will let you margin Treasuries on the cheap.
    - kortilla 7y ago
      No, this is short term lending (e.g. overnight).
  - ajross 7y ago
    Why can't social security pay back a loan? It has revenue, it requires management and accounting for its assets anyway. We take loans from the trust fund constantly! There's absolutely no reason this can't be done.
- obmelvin 7y ago
  Maybe I misunderstand, but since the money paid out through social security will not be repaid by these 60+ year olds, isn't this a very different thing?
- malandrew 7y ago

dsr_ 7y ago

Ahem. Social security is not self-funded, it's funded by current payroll tax receipts, plus a 2.6 trillion trust fund, plus about 5 trillion in debt owed to it by the rest of the government.

surge 7y ago
Right, SS is already in a risky position, most millenials question if it'll even be standing when it comes to their turn (especially if population drops since they're having less children who will pay in), what they're suggesting would make it worse.
- rlt 7y ago
  Well... it's a morbid thought, but if COVID-19 kills a large number of old people quickly, maybe SS will work itself out (FWIW it was my elderly dad who pointed this out to me) Related: according to Twitter, kids are starting to call COVID-19 the "boomer remover" https://twitter.com/BaileyCarlin/status/1238147875143647234 https://twitter.com/BaileyCarlin/status/1238147875143647234
- thawaway1837 7y ago
  Yeah, except that’s not true at all. SS is not in a risky position. The worst that can happen to it is current SS receipts do not pay out enough money for the current SS recipients to live a reasonable quality of life. SS is a transfer of funds from current earners to current retirees. People trying to scare people about SS talk about the trust fund depleting, but the trust fund is simply a bonus that was created to account for the fact that when the baby boomers started retiring, their numbers would be much greater than the numbers of working people to maintain a healthy SS system. So they set aside some additional money so the large number of baby boomers, who in their prime had to pay for a relatively smaller number of retirees, were paying some money towards their own retirement and so wouldn’t place too much of a burden when they retired.
  - toomuchtodo 7y ago
    Thanks for injecting some sanity into this. Benefits drop to about 75% when the trust fund is exhausted around 2026, and we'd simply need to take the salary cap off Social Security taxes and possible transfer some monies from the general fund. It's an entirely solvable political problem.
  - jfengel 7y ago
    "Set aside" is a funny way to put it. They "set it aside" in US Treasury bonds, causing a massive growth in the US government -- who still managed to run a deficit on top of that because they also cut taxes. That artificially boosted the GDP in a way that made a few people much richer while leaving everybody else flat at best. Now, their children inherit an oversized government that they must either cut or pay for with a big tax hike. The people who pocketed that money have resisted any attempt to put the tax burden on them, and indeed, have demanded more and more tax cuts. The next generation is thus not only paying for their parents' retirements, as per the Social Security social contract, but also financing their parents' massive debt. The Social Security Trust Fund helped enable that by making a massive government debt seem smaller than it would otherwise have been.
themagician 7y ago
It was my understanding that the $2.6 ($2.89 actually) trillion is the total asset balance. That includes everything “owed.”
larrywright 7y ago
I never said it was self-funded, just that what you take out is a function of how much you pay in + when you begin withdrawing. The proposal here is a major shift in how it works.

ajross 7y ago

You say that as if liquidity management in a crisis wasn't a thing. Why, exactly, should free temporary cash be available to investment banks but not entitlement programs?

surge 7y ago
As mentioned in another comment, its a loan, not free cash. Investment banks will have to pay it back afterwards.
- macawfish 7y ago
  Sure, but it's basically free money for them because they'll turn around and loan it to the rest of us with higher interest rates.
  - JumpCrisscross 7y ago
    > it’s basically free money They can only borrow to the extent they have collateral. You can do the same thing. Any decent broker will let you margin Treasuries on the cheap.
  - kortilla 7y ago
    No, this is short term lending (e.g. overnight).
- ajross 7y ago
  Why can't social security pay back a loan? It has revenue, it requires management and accounting for its assets anyway. We take loans from the trust fund constantly! There's absolutely no reason this can't be done.
obmelvin 7y ago
Maybe I misunderstand, but since the money paid out through social security will not be repaid by these 60+ year olds, isn't this a very different thing?
malandrew 7y ago